Arbitration Weekly Round Up [12th May-18th May 2025]

Supreme CourtPrivate Arbitration Clauses Cannot Override Statutory Mandates Under MSMED Act : Supreme Court Case Title: M/S HARCHARAN DASS GUPTA VERSUS UNION OF INDIA Citation : 2025 LiveLaw (SC) 567 Reaffirming that the MSMED Act prevails over the Arbitration Act, as held in Gujarat State Civil Supplies v. Mahakali Foods, the Supreme Court set aside the Karnataka High Court's interference with MSMED proceedings in Delhi, despite the contract naming Bengaluru as the arbitration seat. The Court clarified that private contractual clauses cannot override the statutory mandate of the MSMED Act. Since the appellant-supplier was registered in Delhi, the Court noted that the Delhi Arbitration Centre had jurisdiction under Section 18(4) of the MSMED Act, regardless of the contract's designation of Bengaluru as the seat of arbitration due to the overriding nature of the MSMED Act. The bench comprising Justices PS Narasimha and Joymalya Bagchi was hearing the case where a tender was issued by ISRO for construction work in New Delhi. Supreme Court Deprecates 'Deliberate, Ambiguous' Drafting Of Arbitration Clauses; Calls For Suo Motu Action In Malafide Cases Case Title: South Delhi Municipal Corporation v. SMS Limited, SLP (C) No. 16913/2017 Citation : 2025 LiveLaw (SC) 568 Delivering a significant judgment on arbitration law, the Supreme Court today deprecated the practice of arbitration clauses being deliberately phrased "ambiguously" by members of legal fraternity and urged judicial forums across the country to throw out cases involving "shoddily drafted arbitration clauses" at the threshold. The Court said that such "malafide cases" are a "criminal wastage of judicial time" and have been allowed to go on for long. It called on the judicial forums to take stringent actions in this regard by invoking their suo motu powers. A bench of Justices Surya Kant and N Kotiswar Singh delivered the judgment, wherein it was observed that India has made considerable strides in the field of arbitration, but challenges, chiefly in terms of poor drafting of arbitration clauses, remain. Calling for arbitration clauses to be framed with precision, the Court stated, S. 31(7) Arbitration | Arbitral Tribunal Has Power To Award Different Rates Of Interest For Pre-Reference & Pendente Lite Period : Supreme Court Case Title: M/S. INTERSTATE CONSTRUCTION VERSUS NATIONAL PROJECTS CONSTRUCTION CORPORATION LTD. Citation : 2025 LiveLaw (SC) 585 The Supreme Court held that under the Arbitration and Conciliation Act, 1996, an Arbitral Tribunal has the power to award different rates of interest for different phases. A bench comprising Justices Abhay S. Oka and Ujjal Bhuyan overturned the Delhi High Court's ruling, which had invalidated the tribunal's grant of interest on interest, deeming it impermissible under Section 31(7) of the Act. The bench heard the case where the dispute originated from a 1984 contract for the Thermal Power Project in Andhra Pradesh. After the completion of work in 1987, the Appellant-Interstate Construction claimed unpaid dues from NPCC, leading to arbitration proceedings that began in 1993 and continued for nearly three decades through multiple arbitrators. High Courts Bombay High CourtInterim Relief U/S 9 Of Arbitration Act Must Be Sought With 'Reasonable Expedition': Bombay High Court Case Title: Ashoka Buildcon Ltd. vs. Maha Active Engineers India Pvt. Ltd. & Anr. Citation: 2025 LiveLaw (Bom) 192 The Bombay High Court bench of Justice A. S. Chandurkar and Justice Rajesh Patil have held that an applicant under Section 9 of the Arbitration and Conciliation Act, 1996 (“the Act”) must approach the court with reasonable expedition. Delay of several years without adequate explanation is a material factor that militates against the grant of such relief. The court observed that relief under Section 9 of the Act is discretionary and must be guided by the settled principles of interim relief, namely the existence of a prima facie case, balance of convenience, and irreparable harm. An appellate court can interfere with the discretionary order of the trial court only if such discretion has been exercised arbitrarily, capriciously, or in ignorance of settled legal principles. Calcutta High CourtWrit Against Third Party Is Maintainable Despite Arbitration Clause When There Are No Disputes Between Contracting Parties: Calcutta HC Case Title: INDIA AND OTHERS VERSUS SUNIL SAHA AND OTHERS Case Number: MAT 806 OF 2024 AND FMA 735 OF 2024 The Calcutta High Court bench of Chief Justice T.S. Sivagnanam and Justice Chaitali Chatterjee (Das) has held that when there are no disputes or differences between the parties to an agreement containing an arbitration clause, a writ petition may be entertained against a third party for arbitrary deduction of demurrage amounts. The existence of an arbitration...

Arbitration Weekly Round Up [12th May-18th May 2025]

Mohd Talha Hasan

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